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Home My WebLink About2.1 Minutesmount Pto',Pw m ARMUMPTIM Budget Source Category Type Information Alternatives in• - FTIOUSMI, W010011110111 Minutes ATTACHMENTS: April 25 Workshop VB and FC.pdf 1 Village of Mount Prospect Committee of the Whole - Joint Village Board and Finance Commission Meeting Minutes Tuesday, April 25, 2025 / 6:00 p.m. 1. CALL TO ORDER The meeting was called to order by at 6:08 p.m. by Mayor Paul Hoefert in the Board Room at Village Hall, 50 S. Emerson Street. 1. Roll Call a. Village Board The following members of the Village Board of Trustees were present upon roll call by the Village Clerk: Mayor Paul Hoefert, Trustee Agostino Filippone, Trustee Terri Gen, Trustee Richard Rogers, Trustee Michael Zadel and Trustee Colleen Saccotelli. Trustee John Matuszak was absent. b. Finance Commission The following members of the Finance Commission were present upon roll call by the Chairperson of the Finance Commission, Trisha Chokshi: Commissioner Ken Arndt, Commissioner Pam Bazan, Commissioner Yulia Bjekic, Commissioner Vincent Grochocinski, and Commissioner Don Ocwieja. Absent: Commissioner Grossi 2. Approval of the Committee of the Whole Minutes - March 14, 2023 2.1 Minutes of the Committee of the Whole Meeting - March 14, 2023 Motion by Colleen Saccotelli, second by Richard Rogers to approve the Committee of the Whole minutes of March 14, 2023: Aye: Agostino Filippone, Terri Gens, Richard Rogers and Colleen Saccotelli Abstain: Michael Zadel Absent: John Matuszak Nay: None Final resolution: Minutes approved. 3. Citizens to be Heard None 4. Discussion Items 2023 First Quarter Review - Joint Workshop with the Village Board and Finance Commission Director of Finance Amit Thakkar presented the 2023 First Quarter Review. Mr. Thakkar's presentation included a review of 2022 Unaudited Financial Results, First Quarter Review of 2023 and discussions regarding the Fund Balance Policy, Economic Emergency Fund and Home -rule sales tax reallocation. 2 Mr. Thakkar summarized the challenges and achievements of 2022. Key challenges include high inflation, high interest rates, supply -chain issues, a volatile investment market and delays in property tax payments. Mr. Thakkar noted several achievements as well, including record- breaking revenue collections, investment in downtown Mount Prospect, grant funding for major capital projects, levy abatements and suspension of the Village vehicle sticker program. Mr. Thakkar presented 2022 Unaudited Financial Results • Total Revenues in 2022 - $148,576,853; representing $15 million increase from 2021 actual revenue of $133,521,734 • Budget 2022 - $164,194,092 — The budget included $10 in bond proceeds for the Water and Sewer Fund. The Water and Sewer Fund is an enterprise fund, and therefore the amount is treated as a loan/debt and has been reclassed and not reported as income. In addition, the Village received $7 million in American Rescue Plan funds; since the amount was not expected, it is considered deferred revenue and is not yet included in the total revenues for 2022. Mr. Thakkar explained it is collected, but unearned at this time. • Actual 2022 General Fund revenues - $151,706,418; representing an $13 million increase from 2021 actual revenues of $138,126,088. Mr. Thakkar provided details regarding the Village's major revenue sources and displayed areas of growth since 2017. Major revenue sources include: • State Sales Tax • Home Rule Sales Tax • Income Tax • State Use Tax • Real Estate Transfer Tax • Food & Beverage Tax Mr. Thakkar discussed 2022 Village -wide expenditures: • Total expenditures - $124 million represents 78% of the annual budgeted expenditures • Many capital projects are delayed due to supply chain issues; $12 million worth of projects are transferred from year 2022 to 2023 • Personnel Expenditure includes overtime totaling $2,494,150; 2021 total overtime in 2021 was $2,348,229 • All departmental expenditures were within the prescribed budgetary limits. • Pension Fund's main income is derived from investment income. Mr. Thakkar stated 2022 was a challenging year for investments; change in value for our investments represent a $14 million unrealized loss. Mr. Thakkar detailed the adopted, amended, and actual General Fund Reserves for 2022. The General Fund in 2022 closed with a surplus of $13,584,510. The spendable Fund Balance is $30,626,681 representing 40% of the budgeted expenditures. Mr. Thakkar presented the Village's 2022 Cash and Investments that total $107,158,634. Abatements total $2 million; abatements are needed to keep the levy flat. Mr. Thakkar presented the first quarter revenue analysis for 2023. The total recognized revenues for the first quarter are $22 million. This collection is trailing behind by $4.4 million compared to the first quarter collection in 2022 due to the following: • Delayed first installment property tax payment - $5.6 million (due in March for FY 2022) • Rebuild Illinois one-time- $594,569 • Suspension of Vehicle Sticker Program for FY (fiscal year) 2023 Apart from these items, FY 2023 revenues are tracking higher by $2.1 million. Mr. Thakkar presented First Quarter Revenues for FY 2023: • Collections in the Village's major revenue sources are thus far trailing higher compared to 2022; Real estate transfer taxes are trailing lower due to the status of the current housing market 3 Mr. Thakkar presented the first quarter expenditures for 2023 totaling $23.2 million. The expenditures are trending behind by $1.6 million compared to the same quarter in 2022 due to the lower amount recognized for Public Safety Pension expenses during the first quarter 2023; Mr. Thakkar stated it is a timing issue and will be resolved before the end of 2023. Mr. Thakkar added most categories are at par with the initially estimated amounts for the first quarter; all departments are within expected estimated amounts for the first quarter of 2023. Mr. Thakkar defined and discussed the Village's Fund Balance policy. Mr. Thakkar began by defining what a fund balance is and its importance, relevance and purpose to a governmental body. A fund balance includes three categories: Non -spendable Fund Balance, Restricted Fund Balance (revenue for a specific reason and purpose i.e. American Rescue Fund) and Unrestricted Fund Balance (budget -approved expenses for day-to-day services). Mr. Thakkar explained that a fund balance is needed because not all revenues are collected upfront or at the same time. By state regulation under the Prompt Payment Act, the Village is required to pay all bills within sixty days or less; the fund balance assists with this in addition to compliance with on-time debt service payments, risk management purposes and stabilization of tax rates. Mr. Thakkar further explained what a fund balance does for a municipality by stating it defines the minimum, maximum and target fund balance and defines action items in cases where the fund balance falls below the minimum required fund balance. The fund balance also ensures continuity of operation and is an important criterion evaluated by credit rating agencies. The higher the fund balance policy requirements, the higher the creditworthiness, which results in a lower interest rate. Mr. Thakkar stated the Village's target fund balance is 25 percent of the year's annual budgeting expenditures. Mr. Thakkar added the maximum fund balance is capped at 50 percent. Recent projects funded by the Fund Balance included flood control projects at Burning Bush and Aspen Trails, abatement of pension levies, abatement of Police and Fire Headquarter debt levies and replacement of the Village Vehicle Sticker program revenue. Mr. Thakkar presented issues with the Village's current Fund Balance Policy. The issues include emphasis placed on the accounting fund balance instead of a spendable fund balance, absence of an official emergency fund and lack of long-term contingency reserves should the Village be faced with economic downturns, state legislative impacts and other emergency challenges. Mr. Thakkar provided a snapshot of the Village's current fund balance along with how much fund balance is sufficient to maintain a smooth operation that includes a four-month cash reserve balance. Future uses of the fund balance include $2 million towards additional pension abatements, $1.4 million toward Police and Fire Headquarters bond and $1.4 million to the Vehicle Sticker fund, resulting in approximately $282 annual relief for an average household. Mr. Thakkar shared staff recommendation regarding revisions to the Village Fund Balance that include increasing the fund balance target to approximately 40 percent of the annual budgeted expenditures. Revisions include direction for use should the fund balance increase beyond 60 percent and dips below 30 percent. If or when this decrease occurs, staff will report if the decrease is temporary or permanent. If permanent, staff will be required to report to the Finance Commission and the Village Board if contingency planning should be deployed and/or use of the Economic Emergency Fund should be triggered. Mr. Thakkar stated staff is also recommending creation of an Economic Emergency Fund for use during unforeseen emergencies. Unforeseen emergencies are defined as natural or manmade disasters, revenue shortfalls, economic downturn, emergency infrastructure repairs, pension and debt service levy abatements and stabilizing public finance. Mr. Thakkar stated an Economic Emergency Fund can provide budgeting flexibility which allows local governments to address unexpected expenses without cutting programs or services. Existence of an emergency fund can also improve the credit ratings for local governments, making it easier and cheaper to borrow 4 money when needed. Most important however, is the ability for a municipality to meet the emergency needs of the time. Mr. Thakkar answered questions from the Village Board and Finance Commission. A discussion regarding Mr. Thakkar's presentation followed. Board Comments: • Economic Emergency Fund makes sense; supports restructuring of the Fund Balance; especially if it will help the Village achieve a triple A bond rating • Economic Emergency Fund will allow the Village to continue services should something happen • Proposal for changes in the Fund Balance helps position the Village for important Capital Improvements Mr. Thakkar provided the following in response to questions from the Board: • The Village Code provides authority to the Village Manager to initiate expenditures in an emergency without formal Board approval; within fourteen (14) days of the purchase(s), the Village Board must ratify the emergency action of the Village Manger at a public meeting of the Village Board • The last bond rating for the Village was in January 2022; the next one is in 2024 • Plans to conduct a special census upon completion/occupancy of downtown developments • There are no current legislative items to date that will have a direct impact on the Village; staff is continually looking for these items • Establishment of the Economic Emergency Fund was supported by the Finance Commission by a vote of 4-1 • Dramatic changes in the Fund Balance will be reported to the Board immediately; monthly reports are currently provided to the Board • Tax Increment Financing data is usually reported in July (last year it was receiving in September) • Too early to project 2023 property tax levy Mr. Thakkar concluded the evening's presentation with information regarding the proposal to use some portion of the state sales tax toward funding capital projects. Currently, the Village is using Home -Rule sales tax to fund capital project, while state sales tax is a more suitable item for funding capital projects. Mr. Thakkar presented a sensitivity data analysis that included 2016 as base data. Staff recommends to allocate more stable or fixed revenue sources for operations and to allocate variable revenue sources for capital or one-time project costs. Based on the presented analysis, it is recommended to use home -rule sales tax for operating expenditures, while some portion of sales tax should be allocated to capital project funds. Mr. Thakkar stated formal approval of the Fund Balance change, establishment of the Economic Emergency Fund and accompanying budget amendments will be items on a near -future Village Board meeting. Mr. Thakkar concluded the discussion by thanking Jenny Fitzgerald, Village Manager Michael Cassady, Assistant Village Manager Nellie Beckner, Village leadership team, Finance Commission and the Village Board for their support and commitment to fiscal responsibility. No further discussion. S. Any Other Business None 6. Adjournment There being no further business to discuss, Mayor Hoefert asked for a motion to adjourn. Trustee Rogers, seconded by Trustee Saccotelli, moved to adjourn the meeting. By unanimous voice vote of the Village Board and Finance Commission, the April 25, 2023 Committee the Whole Joint Village Board and Finance Commission workshop adjourned at 8:43 p.m. 5 Respectfully submitted, Karen M. Agoranos Village Clerk